Top Stories
Top Stories
Economy

Ken Langone urges Fed to hold steady: 'Recessions are like diets, you need one' periodically

Key Points
  • Wall Street expects the Fed on Wednesday to reduce interest rates again by 0.25%. However, it's a move Home Depot co-founder Ken Langone sees as unnecessary.
  • "Savings are up. Consumer debt is down. Equity and homes are going up and doing strong. The consumer by virtue, their spending habits, everyone is enthusiastic," says the longtime GOP supporter.
  • While he doesn't see a recession coming, Langone says one could trim excess out of the economy and provide a reset for healthier growth in the long run.
VIDEO8:2408:24
Ken Langone: US economy is in good shape

Another Federal Reserve interest rate cut could send the wrong message across the world, billionaire and longtime GOP supporter Ken Langone told CNBC on Wednesday.

"We want to be careful that we don't get the world to believe we can manage the world into prosperity," said Langone, also co-founder of Home Depot. "Recessions are like diets. You need one every once in a while."

While he doesn't see a recession coming, Langone said one wouldn't lead to complete turmoil, because it would trim excess out of the economy and provide a reset for healthier growth in the long run.

Langone, also founder of investment bank Invemed Associates, said on "Squawk Box" that Wednesday's expected 0.25% Fed rate cut is unnecessary. "What this is all about is taking an aspirin before you have a headache."

He said the economy, from where he sits, looks "pretty good" and doesn't need a boost.

"Savings are up. Consumer debt is down. Equity and homes are going up and doing strong. The consumer by virtue, their spending habits, everyone is enthusiastic," he added.

Nevertheless, the markets see the Fed cutting rates again — due more to the dimming global economic outlook and risks from the ongoing U.S.-China trade war, than a quantifiable slowing in American growth.

The Fed's 0.25% rate reduction in July was the first such move in more than a decade.

However, a Fed cut of that magnitude Wednesday would certainly disappoint President Donald Trump who called the Fed "boneheads" and said U.S. rates should be zero or even negative like other central banks around the world.

Langone, who supports Trump, argued that a president calling for lower rates is only "natural," especially with the prospect of reelection approaching. "They all want lower rates, because they think it enhances the economy, which they think enhances their political standing."

"I'm not going to comment on the way the president says or behaves or does," he added. "The bottom line to me is how he's doing, and I think he's doing a hell of a job."

Langone is certainly not an apologist for the president. He ended up backing Trump in the 2016 election after first supporting Chris Christie and then John Kasich. Since the election, Langone has been complimentary of the president's business-friendly policies but also critical of Trump's response to the 2017 deadly white nationalist rally in Virginia.